Bill
A 5257
A5257 lowers the lottery-funded minimum transfer to Common Pension Fund L from 30% to 27% starting FY2026, with a three-year test to decide permanence and a pension shortfall revie
Note on title vs. content
- The bill caption you provided (Establishes the Defund Municipalities that Defund the Police Act) does not match the bill text and committee/fiscal documents supplied. The legislative documents for A5257 concern changes to the apportionment of State Lottery proceeds for pension fund contributions. This summary describes the actual bill text and fiscal documents on file.
Summary — purpose and intent
- A5257 would amend State law governing the apportionment of proceeds from the New Jersey State Lottery to change the minimum percentage of lottery proceeds dedicated to the Lottery Enterprise contribution (the investment account of Common Pension Fund L). The intent is to temporarily lower the mandatory dedication percentage and then determine whether the lower rate should remain permanently based on subsequent lottery sales and State pension funding outcomes.
Key provisions
- Amendment: Modifies section 7 of P.L.1970, c.13 (C.5:9-7) to change the minimum dedication to Common Pension Fund L from 30% to 27% of proceeds accruing from the sale of lottery tickets or shares.
- Effective date: The lowered 27% dedication applies beginning State Fiscal Year (FY) 2026 (July 1, 2025).
- Base fiscal year: FY2025 (July 1, 2024–June 30, 2025) is designated as the “base fiscal year” for later comparisons.
- Three‑year test and permanence rule:
- If the average annual total sales and total revenues from the three consecutive fiscal years after the base (FY2026–FY2028) are equal to or greater than those figures in the base year, the 27% dedication becomes permanent.
- If those three‑year averages are less than the base year figures, the dedication reverts to no less than 30% of proceeds.
- Pension‑contribution safeguard: Commencing in the fourth fiscal year after the base (FY2029), if the dedication was reduced to 27% and the State fails to make the full actuarially‑determined annual contribution to retirement systems (per actuarial valuations), the Director of the Division of the State Lottery must procure an independent third‑party review. If the review finds the reduction did not produce higher transfers to Common Pension Fund L, the dedication permanently reverts to 30%, effective in the second fiscal year after the shortfall; no further reviews are required if reversion occurs.
- Statutory target: The amendment changes the floor to 27% (committee‑amended language). Earlier introduced versions and fiscal notes considered 25% in some drafts.
Who is affected
- Common Pension Fund L (investment account for State retirement systems) — potential changes in annual transfers.
- State pension systems and beneficiaries — indirect impact through State appropriations that make up pension funding gaps.
- Division of the State Lottery and its vendors (e.g., sales/marketing contractors) — operational and revenue implications.
- State taxpayers and budget — potential increases or decreases in annual State appropriations for pensions depending on net effect.
- Division of Pensions and Benefits (administration/monitoring responsibilities).
Fiscal and implementation impact
- Office of Legislative Services (OLS) fiscal estimate: indeterminate impact on State expenditures and revenues.
- A lower percentage could reduce direct transfers from lottery to Pension Fund L, forcing higher State appropriations to meet actuarial pension requirements.
- Conversely, lottery market analysis cited by lottery staff (vendor Northstar) projected that a reduced mandatory contribution might increase sales by $50–$100 million annually, potentially increasing transfers (vendor estimated up to roughly $15 million increase in contributions in early years under certain scenarios).
- Agencies affected: Division of Pensions and Benefits; Division of State Lottery (Treasury).
- If enacted, the key decision point to determine permanence or reversion occurs after FY2028, with actions commencing FY2029.
Legislative status and timeline
- Introduced in Assembly: February 10, 2025 (sponsor: Asm. Karl Brabenec).
- Referred to Assembly Tourism, Gaming and the Arts Committee; later transferred to Assembly Budget Committee.
- Assembly Budget Committee reported the bill with amendments (6/26/2025) lowering the floor to 27% and setting FY2025 as base year; reported out 2nd reading.
- Substituted by S4122 (1R) on 6/30/2025.
- Current status (per documents): Referred to Local Governments (record shows multiple referrals on 2/12/2025).
Related and prior bills
- Companion: S4122 (1R), S3505
- Prior‑session versions: A9031, A5531
For further review
- Primary statutory change: amendment to section 7 of P.L.1970, c.13 (C.5:9-7).
- Key documents: Assembly Budget Committee statement (6/26/2025) and OLS Legislative Fiscal Estimates (June/July 2025).
Compiled from official sources — confirm details with the bill’s official record.
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